NetEase, Inc (NASDAQ:NTES) reported a fiscal third-quarter revenue decline of 3.9% year-on-year to $3.73 billion (26.2 billion Chinese yuan), topping the analyst consensus estimate of $3.65 billion.

The Chinese gaming player’s adjusted EPADS of $1.67 beat the analyst consensus estimate of $1.61. The stock climbed after the print.

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Segments and margins: Games and related value-added services revenues declined 4.2% year over year to $3.0 billion. The corresponding gross margin decreased by 20 bps to 68.8%, mainly attributable to changes in product mix.

Youdao, Inc’s (NYSE:DAO) revenue climbed by 2.2% year over year to $224.1 million, and the corresponding gross margin declined by 570 bps to 50.2%, primarily due to decreased net revenues from its learning services.

Cloud Music’s revenues were $284.9 million, up 1.3% year over year, and its gross margin expanded by 560 bps to 32.8%.

Innovative businesses and other revenue declined 10.3% year over year to $252.8 million, and the gross margin increased by 1,050 bps to 37.8%, mainly due to increased gross profit margins from several businesses included within the segment.

As of September 30, 2024, NetEase held $17.1 billion in cash and equivalents and generated $1.5 billion in operating cash flow.

Dividend: The board of directors approved a dividend of $0.4350 per ADS for the third quarter of 2024.

NetEase launched new popular titles and expanded existing games into additional regions, enhancing its competitive presence across diverse gaming genres.

The mobile version of Naraka: Bladepoint, released in July, quickly gained traction, climbing to No. 4 on the iOS grossing chart after its September update, meeting strong player demand for action-based PvP games.

Racing Master led the App Store and Google Play free-to-play charts in Japan after its August launch.

The return of World of Warcraft and Hearthstone in China reignited high levels of player enthusiasm. World of Warcraft’s relaunch boosted daily active players by 50% compared to pre-shutdown figures, while Hearthstone saw over 150% growth in player activity.

NetEase maintained the popularity of key games like Identity V and Naraka: Bladepoint, highlighting its strong operational capabilities in the online gaming sector.

The company expanded its portfolio by announcing exciting new titles, including Destiny: Rising and MARVEL Mystic Mayhem. Upcoming releases like Marvel Rivals and Where Winds Meet are set for a December debut.

Youdao achieved its first-ever operating profit for a third quarter, marking a turnaround from a loss in the same period last year.

NetEase Cloud Music continued its growth, expanding its subscriber base and maintaining healthy revenue momentum within its music-focused ecosystem.

NetEase stock plunged 18% year-to-date. U.S. listed Chinese stocks saw a selloff as the fiscal stimulus failed to impress the street and Donald Trump’s presidential victory makes the country susceptible to huge tariffs that Trump promised during his campaigns.

Authorities arrested NetEase Games General Manager Xiang Lang, esports head Jin Yuchen, and other staff on bribery and money laundering charges.

NetEase said in a statement to Benzinga that it recently addressed two cases of suspected misconduct. The instances involve “a small number of employees within its domestic Chinese market operations,” the company said.

Price Action: NTES stock is up 4.20% at $79.48 premarket at the last check Thursday.

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